Few options left to save the euro zone

[girl gone mad]

Few options left to save the euro zone
by Edward Harrison
http://www.nakedcapitalism.com/2011/09/few-options-left-to-save-the-euro-zone.html

How should I begin this post? Let me start out with my former default position:

I have always seen a sovereign default and restructuring within the euro zone as more likely than a break-up of the euro zone. I would say I considered the dissolution of the euro zone as an outlier. See my thoughts from "http://www.creditwritedowns.com/2010/03/anticipating-eurozone-collapse.html">Anticipating Eurozone Collapse" in March. Increasingly, this possibility is being raised. Granted, the chances are increasing but it still cannot be the baseline case.

-http://www.creditwritedowns.com/2010/11/monetisation-default-dissolution.html">Three options for the euro zone: monetisation, default, or break-up

This is no longer my view. Breakup is my default case now. Let me tell you why.

The German Constitutional Court decision is critical

In June, I wrote that http://www.creditwritedowns.com/2011/06/euro-zone-break-up.html">the chances of a euro zone breakup are now increasing, giving background for the current political turmoil surrounding Greece. My conclusion was “the policy decisions that governments and the EU are making cannot be maintained politically in the periphery or in the core”. A few days later, Nouriel Roubini wrote a very good note explaining then why the http://www.creditwritedowns.com/2011/06/eurozone-breakup.html">Eurozone could break up over a five-year horizon. We both stated that the key to maintaining the euro zone at all was the potential for closer integration of the member states. But the German Constitutional Court decision makes this nearly impossible..

http://www.nakedcapitalism.com/2011/09/few-options-left-to-save-the-euro-zone.html">more...

[xchrom]

1. Recommend

[Sirveri]

2. differing cultural blocks who tried to work together and found they can't.

Sound like anyone else around?

[golfguru]

3. the Euro bubble is bursting right in front of us

and all those countries in trouble (Portugal, Italy, Ireland, Greece, Spain)
have one thing in common...too much debt. I hope and pray we learn the lesson.

[girl gone mad]

4. The lesson learned is to never abrogate your currency sovereignty.

[westerebus]

6. ^^

:thumbsup:

[golfguru]

10. OK, but are'nt Germany, France, Netherlands, Sweden etc also

in the Euro zone? They seem to be doing OK. I have not heard
they have excessive national debts. May be France does, and
could be the next in line.

[Art_from_Ark]

21. Sweden has its own currency

In fact, all Scandinavian countries except for Finland have retained their own currencies.

[Art_from_Ark]

20. The problem is, most of those countries were having trouble with their own currencies

before the Euro. For example, the Italian lira, Spanish peseta, Greek drachma, and Portuguese escudo were all having a difficult time staying afloat in the currency sea. All of them had lost considerable ground against the dollar and the mark, for example, so joining a currency union that theoretically could provide them with some monetary stability seemed like a good idea.

[zippytheplatypus]

5. what, four basic questions? i guess..

Who deserves the most blame, the individual sovereign governments, the Eurozone Institutions or the IMF/Goldman Sachs?

Is the Euro really in anyone's best interests in the long term?

Can you reestablish sovereign states if the Euro falls?

Is anyone qualified to answer these kinds of questions? (i know the answer to this one is no..)

[westerebus]

7. Welcome to DU.

1- Politicians and banksters

2- Yes

3- They are still sovereign states even if the euro fails, with the exception of Belgium.

4- Hung jury.

[zippytheplatypus]

8. hey thx nice ta meecha..

Sure those are easy quick answers but that & $6 gets you a cup of shitty coffee at Starbucks. Personally I don't think anybody can call Greece a sovereign nation anymore. If you do, how are you coming to that conclusion? Now you won't find anyone on this planet that hates GS & IMF assholes more than me, maybe a tie is possible theoretically but there's a ton of blame to go around. Information is power & I think we all need some transparency pretty badly.

Also with as different as France is from Germany as from Italy who's to really say that the Euro was ever in anyone's best interests in the first place. I've always been bearish on artificial conglomeration just for the sake of being big.. You can be global without being a giant ominous mutant. Maybe beyond the bullshit debt and fraud it just doesn't work. I don't know, nobody really knows but I want to be informed & open minded. Unamerican to the core but so be it..

[westerebus]

9. From the Greek perspective..

They have been at this far longer then most, selling the news that is. News they make up as they go that is then repeated. At some point the opportunity to convert the news into speculation occurs. Getting a whiff that money in some form may change hands, investment develops. News that investment will happen brings attention and that news is repeated. Upon hearing the news, more investors appear not wanting to miss out. Charts and graphs are presented. Lectures and presentations held aided by those willing to assist in the promotion of the on going development of invest-able opportunities.

Middle men with connections in government know fixers who are capable of putting the right people in the right place at the right time. All that's required is a little greece, sorry, grease to get the wheels turning. Ask Goldman-Saks how that works? Or the EU Financial Committee that vetting Greece into the EU. No money down. No job required. Not to many questions asked.

While on the official books, Greece has a government, a banking system, all the modernity of any other nation, it is and will continue to be the home of Mythos and Logos. The government raises tax rates on mixed drinks served in restaurants, you now get a glass of ice with a twist of lemon and a pony bottle of your favorite libation. Un mixed = Un taxed.

When and if the German state stops funding the southern tier life style so enjoyed by anyone who has ever had the fortune to be there, it shoots itself in the foot. Having lent them so much for so long on the news there was investment opportunity to be had. Will the wound be fatal to the German economy? No. Will Greece cease to exist? No.

Will several large EU banks go screaming into the abyss? Three or more. Still not the end of the world.

What happens to the euro? That depends on how long the Germans decide to put up with the CDS market. As it is not in their interests to allow anyone to short their economy and ein volk. It was not that long ago that there was two Germany's. And the question becomes are the Germans willing to drop the euro? Do Volkswagens come in red, white and blue? Why would they kill what's working for themselves?

You know thousand Germans have a living memory of communism, Russian occupation, and the Stasi. Their Green Party was on every ballot in the last election. What's this mean for Greece?

Like Las Vegas, what happens in Greece gets told to every body they know. Have you heard the news about Greece? Looks like an investment opportunity. Just so happens, I know a guy.

[zippytheplatypus]

11. great take

Sure nobody knows but those who know.. all this austerity & that brew ha ha that Max Keiser reported on paints quite the picture from afar but again who's to know? One of the few countries in Europe I've never visited & I do understand they have been very high on the hog accumulating just a staggering amount of debt but its getting to point where there is so much derivative debt that lifestyle choices are completely irrelevant.

No matter what I will always be of the viewpoint that 99.9% of all nations & empires die from debt rather than war, occupation or natural disaster. I'm nervous for real because of that added to the historic lifespan of a fiat currency being 27 years. We got a bad combination right now and I don't like it. I look at Greece like everybody as the test case for what's coming next. I also don't like how close they are to Turkey along with what's going on with Turkey v Israel & oh btw the Kurds are in the mix too & got money & want sovereignty & don't really want to be landlocked. Its getting messy & very crowded..

[OllieLotte]

13. So you give the Greek citizens a complete pass?

They elected the politicians that delivered what they wanted. They took out loans so they wouldn't have to do without. Loans at interest rates that were below what they should of been. If the rates were higher, you would be calling them banksters...oh wait...never mind. Sometimes it sucks to get what you deserve.

[westerebus]

14. Which Greek citizens are you referring to?

The politicians and their accomplices that created the ponzi or the taxi drivers who drove them to the airport to pick up the AIG insured team of international bankers?

I don't blame the taxi driver. Even if he voted his self interests, say a good pension and more funding for his kids' education.

The scheme wasn't caused by the taxi driver. Now, the Greek billionaires who don't pay taxes and buy political favors is another matter.

The Greek people are getting the same justice we are getting here. They are getting stuck with the bill without the benefits.

The politicians and banksters created this mess. So who exactly do you hold accountable?




edit: punctuation

[zippytheplatypus]

15. every citizen has a responsibility to be enlightened

And engage in society and the issues of the day. What the lower classes lack in personal capital they make up for in numbers. When the underclass chooses not to be educated and participate in the political & economic processes they are making de facto choices for oppression and enslavement by creating a vacuum. There is always a balance.

[westerebus]

16. Incorrect.

There is never a balance. The friction between the classes keeps the poor poor and the bourgeois asleep from too rich a diet as the capitalists imprison the one with debt and politics and the other with the opiates of ignorance.

[zippytheplatypus]

19. so anyone born into the underclass should commit suicide??

Ignorance and apathy is a conscious choice. Is it more difficult as part of the underclass innately, absolutely but not by much. I feel sorry for you if you think a human being is that weak & needs to be hand held. Where does that come from anyway?

[westerebus]

22. There is no nihilism in my observation.

Poor people adapt to their circumstances, they do not choose to be poor if the opportunity presents itself.

There are scores of human beings that require hand holding, children being first on the list.

How much enlightenment will fill an empty belly? Should they organize and form a PAC?

There is a great degree of difficulty pulling one's self up by the boot straps when they don't have boots to begin with.

Parents who can't find work because jobs were shipped over seas are not ignorant, they are politically powerless.

It was the working poor who are hit first and the hardest. Living pay check to paycheck.

They are not apathetic about eating or feeding their children. Voting hasn't changed their prospects to the promises made.

It is the middle class that is now in the stages of opportunities diminishing. Well educated and engaged find themselves jobless.

That's not a result of apathy or ignorance.

By the way, the suicide rate among the middle economic tier is rising.

[barb162]

12. To me this is no great shakes. There never was a great need

to have a united currency for a continent. If all the European countries started using their own currencies again, things would probably be sounder. And countries like Germany and France wouldn't be bailing countries like Greece, Portugal, etc. And Brussels wouldn't be running the show. Somehow Europe survived before the European Union and the euro.

[roamer65]

17. Delete.

[roamer65]

18. A failure of the Euro will cause a failure of the fiat currency system.

The Europeans need to step up to their destiny to become a fiscal and political federation. If not, they will ignite the Greatest Depresssion.

[Odin2005]

23. The Euro is a falure of disasterous proportions.